China’s Rise, America’s Fall

Which superpower is more threatened by its “extractive elites”?

The rise of China surely ranks among the most important world developments of the last 100 years. With America still trapped in its fifth year of economic hardship, and the Chinese economy poised to surpass our own before the end of this decade, China looms very large on the horizon. We are living in the early years of what journalists once dubbed “The Pacific Century,” yet there are worrisome signs it may instead become known as “The Chinese Century.”

But does the Chinese giant have feet of clay? In a recently published book, Why Nations Fail, economists Daron Acemoglu and James A. Robinson characterize China’s ruling elites as “extractive”—parasitic and corrupt—and predict that Chinese economic growth will soon falter and decline, while America’s “inclusive” governing institutions have taken us from strength to strength. They argue that a country governed as a one-party state, without the free media or checks and balances of our own democratic system, cannot long prosper in the modern world. The glowing tributes this book has received from a vast array of America’s most prominent public intellectuals, including six Nobel laureates in economics, testifies to the widespread popularity of this optimistic message.

Yet do the facts about China and America really warrant this conclusion?

China Shakes the World

By the late 1970s, three decades of Communist central planning had managed to increase China’s production at a respectable rate, but with tremendous fits and starts, and often at a terrible cost: 35 million or more Chinese had starved to death during the disastrous 1959–1961 famine caused by Mao’s forced industrialization policy of the Great Leap Forward.

China’s population had also grown very rapidly during this period, so the typical standard of living had improved only slightly, perhaps 2 percent per year between 1958 and 1978, and this from an extremely low base. Adjusted for purchasing power, most Chinese in 1980 had an income 60–70 percent below that of the citizens in other major Third World countries such as Indonesia, Nigeria, Pakistan, and Kenya, none of which were considered great economic success stories. In those days, even Haitians were far wealthier than Chinese.

All this began to change very rapidly once Deng Xiaoping initiated his free-market reforms in 1978, first throughout the countryside and eventually in the smaller industrial enterprises of the coastal provinces. By 1985, The Economist ran a cover story praising China’s 700,000,000 peasants for having doubled their agricultural production in just seven years, an achievement almost unprecedented in world history. Meanwhile, China’s newly adopted one-child policy, despite its considerable unpopularity, had sharply reduced population growth rates in a country possessing relatively little arable land.

A combination of slowing population growth and rapidly accelerating economic output has obvious implications for national prosperity. During the three decades to 2010, China achieved perhaps the most rapid sustained rate of economic development in the history of the human species, with its real economy growing almost 40-fold between 1978 and 2010. In 1978, America’s economy was 15 times larger, but according to most international estimates, China is now set to surpass America’s total economic output within just another few years.

Furthermore, the vast majority of China’s newly created economic wealth has flowed to ordinary Chinese workers, who have moved from oxen and bicycles to the verge of automobiles in just a single generation. While median American incomes have been stagnant for almost forty years, those in China have nearly doubled every decade, with the real wages of workers outside the farm-sector rising about 150 percent over the last ten years alone. The Chinese of 1980 were desperately poor compared to Pakistanis, Nigerians, or Kenyans; but today, they are several times wealthier, representing more than a tenfold shift in relative income.

A World Bank report recently highlighted the huge drop in global poverty rates from 1980 to 2008, but critics noted that over 100 percent of that decline came from China alone: the number of Chinese living in dire poverty fell by a remarkable 662 million, while the impoverished population in the rest of the world actually rose by 13 million. And although India is often paired with China in the Western media, a large fraction of Indians have actually grown poorer over time. The bottom half of India’s still rapidly growing population has seen its daily caloric intake steadily decline for the last 30 years, with half of all children under five now being malnourished.

China’s economic progress is especially impressive when matched against historical parallels. Between 1870 and 1900, America enjoyed unprecedented industrial expansion, such that even Karl Marx and his followers began to doubt that a Communist revolution would be necessary or even possible in a country whose people were achieving such widely shared prosperity through capitalistic expansion. During those 30 years America’s real per capita income grew by 100 percent. But over the last 30 years, real per capita income in China has grown by more than 1,300 percent.

Over the last decade alone, China quadrupled its industrial output, which is now comparable to that of the U.S. In the crucial sector of automobiles, China raised its production ninefold, from 2 million cars in 2000 to 18 million in 2010, a figure now greater than the combined totals for America and Japan. China accounted for fully 85 percent of the total world increase in auto manufacturing during that decade.

It is true that many of China’s highest-tech exports are more apparent than real. Nearly all Apple’s iPhones and iPads come from China, but this is largely due to the use of cheap Chinese labor for final assembly, with just 4 percent of the value added in those world-leading items being Chinese. This distorts Chinese trade statistics, leading to unnecessary friction. However, some high-tech China exports are indeed fully Chinese, notably those of Huawei, which now ranks alongside Sweden’s Ericsson as one of the world’s two leading telecommunications manufacturers, while once powerful North American competitors such Lucent-Alcatel and Nortel have fallen into steep decline or even bankruptcy. And although America originally pioneered the Human Genome Project, the Beijing Genomics Institute (BGI) today probably stands as the world leader in that enormously important emerging scientific field.

China’s recent rise should hardly surprise us. For most of the last 3,000 years, China together with the Mediterranean world and its adjoining European peninsula have constituted the two greatest world centers of technological and economic progress. During the 13th century, Marco Polo traveled from his native Venice to the Chinese Empire and described the latter as vastly wealthier and more advanced than any European country. As late as the 18th century, many leading European philosophers such as Voltaire often looked to Chinese society as an intellectual exemplar, while both the British and the Prussians used the Chinese mandarinate as their model for establishing a meritocratic civil service based on competitive examinations.

Even a century ago, near the nadir of China’s later weakness and decay, some of America’s foremost public intellectuals, such as Edward A. Ross and Lothrop Stoddard, boldly predicted the forthcoming restoration of the Chinese nation to global influence, the former with equanimity and the latter with serious concern. Indeed, Stoddard argued that only three major inventions effectively separated the world of classical antiquity from that of 18th-century Europe—gunpowder, the mariner’s compass, and the printing press. All three seem to have first appeared in China, though for various social, political, and ideological reasons, none were properly implemented.

Does China’s rise necessarily imply America’s decline? Not at all: human economic progress is not a zero-sum game. Under the right circumstances, the rapid development of one large country should tend to improve living standards for the rest of the world.

This is most obvious for those nations whose economic strengths directly complement those of a growing China. Massive industrial expansion clearly requires a similar increase in raw-material consumption, and China is now the world’s largest producer and user of electricity, concrete, steel, and many other basic materials, with its iron-ore imports surging by a factor of ten between 2000 and 2011. This has driven huge increases in the costs of most commodities; for example, copper’s world price rose more than eightfold during the last decade. As a direct consequence, these years have generally been very good ones for the economies of countries that heavily rely upon the export of natural resources—Australia, Russia, Brazil, Saudi Arabia, and parts of Africa.

Meanwhile, as China’s growth gradually doubles total world industrial production, the resulting “China price” reduces the cost of manufactured goods, making them much more easily affordable to everyone, and thereby greatly increases the global standard of living. While this process may negatively impact those particular industries and countries directly competing with China, it provides enormous opportunities as well, not merely to the aforementioned raw-material suppliers but also to countries like Germany, whose advanced equipment and machine tools have found a huge Chinese market, thereby helping to reduce German unemployment to the lowest level in 20 years.

And as ordinary Chinese grow wealthier, they provide a larger market as well for the goods and services of leading Western companies, ranging from fast-food chains to consumer products to luxury goods. Chinese workers not only assemble Apple’s iPhones and iPads, but are also very eager to purchase them, and China has now become that company’s second largest market, with nearly all of the extravagant profit margins flowing back to its American owners and employees. In 2011 General Motors sold more cars in China than in the U.S., and that rapidly growing market became a crucial factor in the survival of an iconic American corporation. China has become the third largest market in the world for McDonald’s, and the main driver of global profits for the American parent company of Pizza Hut, Taco Bell, and KFC.

Social Costs of a Rapid Rise

Transforming a country in little more than a single generation from a land of nearly a billion peasants to one of nearly a billion city-dwellers is no easy task, and such a breakneck pace of industrial and economic development inevitably leads to substantial social costs. Chinese urban pollution is among the worst in the world, and traffic is rapidly heading toward that same point. China now contains the second largest number of billionaires after America, together with more than a million dollar-millionaires, and although many of these individuals came by their fortunes honestly, many others did not. Official corruption is a leading source of popular resentment against the various levels of Chinese government, ranging from local village councils to the highest officials in Beijing.

But we must maintain a proper sense of proportion. As someone who grew up in Los Angeles when it still had the most notorious smog in America, I recognize that such trends can be reversed with time and money, and indeed the Chinese government has expressed intense interest in the emerging technology of non-polluting electric cars. Rapidly growing national wealth can be deployed to solve many problems.

Similarly, plutocrats who grow rich through friends in high places or even outright corruption are easier to tolerate when a rising tide is rapidly lifting all boats. Ordinary Chinese workers have increased their real income by well over 1,000 percent in recent decades, while the corresponding figure for most American workers has been close to zero. If typical American wages were doubling every decade, there would be far less anger in our own society directed against the “One Percent.” Indeed, under the standard GINI index used to measure wealth inequality, China’s score is not particularly high, being roughly the same as that of the United States, though certainly indicating greater inequality than most of the social democracies of Western Europe.

Many American pundits and politicians still focus their attention on the tragic Tiananmen Square incident of 1989, during which hundreds of determined Chinese protesters were massacred by government troops. But although that event loomed very large at the time, in hindsight it generated merely a blip in the upward trajectory of China’s development and today seems virtually forgotten among ordinary Chinese, whose real incomes have increased several-fold in the quarter century since then.

Much of the Tiananmen protest had been driven by popular outrage at government corruption, and certainly there have been additional major scandals in recent years, often heavily splashed across the pages of America’s leading newspapers. But a closer examination paints a more nuanced picture, especially when contrasted with America’s own situation.

For example, over the last few years one of the most ambitious Chinese projects has been a plan to create the world’s largest and most advanced network of high-speed rail transport, an effort that absorbed a remarkable $200 billion of government investment. The result was the construction of over 6,000 miles of track, a total probably now greater than that of all the world’s other nations combined. Unfortunately, this project also involved considerable corruption, as was widely reported in the world media, which estimated that hundreds of millions of dollars had been misappropriated through bribery and graft. This scandal eventually led to the arrest or removal of numerous government officials, notably including China’s powerful Railways Minister.

Obviously such serious corruption would seem horrifying in a country with the pristine standards of a Sweden or a Norway. But based on the published accounts, it appears that the funds diverted amounted to perhaps as little as 0.2 percent of the total, with the remaining 99.8 percent generally spent as intended. So serious corruption notwithstanding, the project succeeded and China does indeed now possess the world’s largest and most advanced network of high-speed rail, constructed almost entirely in the last five or six years.

Meanwhile, America has no high-speed rail whatsoever, despite decades of debate and vast amounts of time and money spent on lobbying, hearings, political campaigns, planning efforts, and environmental-impact reports. China’s high-speed rail system may be far from perfect, but it actually exists, while America’s does not. Annual Chinese ridership now totals over 25 million trips per year, and although an occasional disaster—such as the 2011 crash in Weizhou, which killed 40 passengers—is tragic, it is hardly unexpected. After all, America’s aging low-speed trains are not exempt from similar calamities, as we saw in the 2008 Chatsworth crash that killed 25 in California.

For many years Western journalists regularly reported that the dismantling of China’s old Maoist system of government-guaranteed healthcare had led to serious social stresses, forcing ordinary workers to save an unreasonable fraction of their salaries to pay for medical treatment if they or their families became ill. But over the last couple of years, the government has taken major steps to reduce this problem by establishing a national healthcare insurance system whose coverage now extends to 95 percent or so of the total population, a far better ratio than is found in wealthy America and at a tiny fraction of the cost. Once again, competent leaders with access to growing national wealth can effectively solve these sorts of major social problems.

Although Chinese cities have negligible crime and are almost entirely free of the horrible slums found in many rapidly urbanizing Third World countries, housing for ordinary workers is often quite inadequate. But national concerns over rising unemployment due to the global recession gave the government a perfect opportunity late last year to announce a bold plan to construct over 35 million modern new government apartments, which would then be provided to ordinary workers on a subsidized basis.

All of this follows the pattern of Lee Kwan Yew’s mixed-development model, combining state socialism and free enterprise, which raised Singapore’s people from the desperate, abject poverty of 1945 to a standard of living now considerably higher than that of most Europeans or Americans, including a per capita GDP almost $12,000 above that of the United States. Obviously, implementing such a program for the world’s largest population and on a continental scale is far more challenging than doing so in a tiny city-state with a population of a few million and inherited British colonial institutions, but so far China has done very well in confounding its skeptics.

America’s Economic Decline

These facts do not provide much evidence for the thesis in Why Nations Fail that China’s leaders constitute a self-serving and venal “extractive” elite. Unfortunately, such indications seem far more apparent when we direct our gaze inward, toward the recent economic and social trajectory of our own country

Against the backdrop of remarkable Chinese progress, America mostly presents a very gloomy picture. Certainly America’s top engineers and entrepreneurs have created many of the world’s most important technologies, sometimes becoming enormously wealthy in the process. But these economic successes are not typical nor have their benefits been widely distributed. Over the last 40 years, a large majority of American workers have seen their real incomes stagnate or decline.

Meanwhile, the rapid concentration of American wealth continues apace: the richest 1 percent of America’s population now holds as much net wealth as the bottom 90–95 percent, and these trend may even be accelerating. A recent study revealed that during our supposed recovery of the last couple of years, 93 percent of the total increase in national income went to the top 1 percent, with an astonishing 37 percent being captured by just the wealthiest 0.01 percent of the population, 15,000 households in a nation of well over 300 million people.

Evidence for the long-term decline in our economic circumstances is most apparent when we consider the situation of younger Americans. The national media endlessly trumpets the tiny number of youthful Facebook millionaires, but the prospects for most of their contemporaries are actually quite grim. According to research from the Pew Center, barely half of 18- to 24-year-old Americans are currently employed, the lowest level since 1948, a time long before most women had joined the labor force. Nearly one-fifth of young men age 25–34 are still living with their parents, while the wealth of all households headed by those younger than 35 is 68 percent lower today than it was in 1984.

The total outstanding amount of non-dischargeable student-loan debt has crossed the trillion-dollar mark, now surpassing the combined total of credit-card and auto-loan debt—and with a quarter of all student-loan payers now delinquent, there are worrisome indicators that much of it will remain a permanent burden, reducing many millions to long-term debt peonage. A huge swath of America’s younger generation seems completely impoverished, and likely to remain so.

International trade statistics, meanwhile, demonstrate that although Apple and Google are doing quite well, our overall economy is not. For many years now our largest goods export has been government IOUs, whose dollar value has sometimes been greater than that of the next ten categories combined. At some point, perhaps sooner than we think, the rest of the world will lose its appetite for this non-functional product, and our currency will collapse, together with our standard of living. Similar Cassandra-like warnings were issued for years about the housing bubble or the profligacy of the Greek government, and were proven false year after year until one day they suddenly became true.

Ironically enough, there is actually one major category in which American expansion still easily tops that of China, both today and for the indefinite future: population growth. The rate of America’s demographic increase passed that of China over 20 years ago and has been greater every year since, sometimes by as much as a factor of two. According to standard projections, China’s population in 2050 will be almost exactly what it was in 2000, with the country having achieved the population stability typical of advanced, prosperous societies. But during that same half-century, the number of America’s inhabitants will have grown by almost 50 percent, a rate totally unprecedented in the developed world and actually greater than that found in numerous Third World countries such as Colombia, Algeria, Thailand, Mexico, or Indonesia. A combination of very rapid population growth and doubtful prospects for equally rapid economic growth does not bode well for the likely quality of the 2050 American Dream.

China rises while America falls, but are there major causal connections between these two concurrent trends now reshaping the future of our world? Not that I can see. American politicians and pundits are naturally fearful of taking on the fierce special interest groups that dominate their political universe, so they often seek an external scapegoat to explicate the misery of their constituents, sometimes choosing to focus on China. But this is merely political theater for the ignorant and the gullible.

Various studies have suggested that China’s currency may be substantially undervalued, but even if the frequent demands of Paul Krugman and others were met and the yuan rapidly appreciated another 15 or 20 percent, few industrial jobs would return to American shores, while working-class Americans might pay much more for their basic necessities. And if China opened wide its borders to more American movies or financial services, the multimillionaires of Hollywood and Wall Street might grow even richer, but ordinary Americans would see little benefit. It is always easier for a nation to point an accusing finger at foreigners rather than honestly admit that almost all its terrible problems are essentially self-inflicted.

Decay of Constitutional Democracy

The central theme of Why Nations Fail is that political institutions and the behavior of ruling elites largely determine the economic success or failure of countries. If most Americans have experienced virtually no economic gains for decades, perhaps we should cast our gaze at these factors in our own society.

Our elites boast about the greatness of our constitutional democracy, the wondrous human rights we enjoy, the freedom and rule of law that have long made America a light unto the nations of the world and a spiritual draw for oppressed peoples everywhere, including China itself. But are these claims actually correct? They often stack up very strangely when they appear in the opinion pages of our major newspapers, coming just after the news reporting, whose facts tell a very different story.

Just last year, the Obama administration initiated a massive months-long bombing campaign against the duly recognized government of Libya on “humanitarian” grounds, then argued with a straight face that a military effort comprising hundreds of bombing sorties and over a billion dollars in combat costs did not actually constitute “warfare,” and hence was completely exempt from the established provisions of the Congressional War Powers Act. A few months later, Congress overwhelmingly passed and President Obama signed the National Defense Authorization Act, granting the president power to permanently imprison without trial or charges any American whom he classifies as a national-security threat based on his own judgment and secret evidence. When we consider that American society has experienced virtually no domestic terrorism during the past decade, we must wonder how long our remaining constitutional liberties would survive if we were facing frequent real-life attacks by an actual terrorist underground, such as had been the case for many years with the IRA in Britain, ETA in Spain, or the Red Brigades in Italy.

Most recently, President Obama and Attorney General Eric Holder have claimed the inherent right of an American president to summarily execute anyone anywhere in the world, American citizen or not, whom White House advisors have privately decided was a “bad person.” While it is certainly true that major world governments have occasionally assassinated their political enemies abroad, I have never before heard these dark deeds publicly proclaimed as legitimate and aboveboard. Certainly if the governments of Russia or China, let alone Iran, declared their inherent right to kill anyone anywhere in the world whom they didn’t like, our media pundits would immediately blast these statements as proof of their total criminal insanity.

These are very strange notions of the “rule of law” for the administration of a president who had once served as top editor of the Harvard Law Review and who was routinely flattered in his political campaigns by being described as a “constitutional scholar.”

Many of these negative ideological trends have been absorbed and accepted by the popular culture and much of the American public. Over the last decade one of the highest-rated shows on American television was “24”, created by Joel Surnow and chronicling Kiefer Sutherland as a patriotic but ruthless Secret Service agent, with each episode constituting a single hour of his desperate efforts to thwart terrorist plots and safeguard our national security. Numerous episodes featured our hero torturing suspected evildoers in order to extract the information necessary to save innocent lives, with the entire series representing a popular weekly glorification of graphic government torture on behalf of the greater good.

Now soft-headed protestations to the contrary, most governments around the world have at least occasionally practiced torture, especially when combating popular insurgencies, and some of the more brutal regimes, including Stalinist Russia and Nazi Germany, even professionalized the process. But such dark deeds done in secret were always vigorously denied in public, and the popular films and other media of Stalin’s Soviet Union invariably featured pure-hearted workers and peasants bravely doing their honorable and patriotic duty for the Motherland, rather than the terrible torments being daily inflicted in the cellars of the Lubyanka prison. Throughout all of modern history, I am not aware of a single even semi-civilized country that publicly celebrated the activities of its professional government torturers in the popular media. Certainly such sentiments would have been totally abhorrent and unthinkable in the “conservative Hollywood” of the Cold War 1950s.

And since we live in a entertainment-dominated society, sentiments affirmed on the screen often have direct real-world consequences. At one point, senior American military and counter-terrorism officials felt the need to travel to Hollywood and urge its screenwriters to stop glorifying American torture, since their shows were encouraging U.S. soldiers to torture Muslim captives even when their commanding officers repeatedly ordered them not to do so.

Given these facts, we should hardly be surprised that international surveys over the past decade have regularly ranked America as the world’s most hated major nation, a remarkable achievement given the dominant global role of American media and entertainment and also the enormous international sympathy that initially flowed to our country following the 9/11 attacks.

An Emerging One-Party State

So far at least, these extra-constitutional and often brutal methods have not been directed toward controlling America’s own political system; we remain a democracy rather than a dictatorship. But does our current system actually possess the central feature of a true democracy, namely a high degree of popular influence over major government policies? Here the evidence seems more ambiguous.

Consider the pattern of the last decade. With two ruinous wars and a financial collapse to his record, George W. Bush was widely regarded as one of the most disastrous presidents in American history, and at times his public approval numbers sank to the lowest levels ever measured. The sweeping victory of his successor, Barack Obama, represented more a repudiation of Bush and his policies than anything else, and leading political activists, left and right alike, characterized Obama as Bush’s absolute antithesis, both in background and in ideology. This sentiment was certainly shared abroad, with Obama being selected for the Nobel Peace Prize just months after entering office, based on the widespread assumption that he was certain to reverse most of the policies of his detested predecessor and restore America to sanity.

Yet almost none of these reversals took place. Instead, the continuity of administration policy has been so complete and so obvious that many critics now routinely speak of the Bush/Obama administration.

The harsh violations of constitutional principles and civil liberties which Bush pioneered following the 9/11 attacks have only further intensified under Obama, the heralded Harvard constitutional scholar and ardent civil libertarian, and this has occurred without the excuse of any major new terrorist attacks. During his Democratic primary campaign, Obama promised that he would move to end Bush’s futile Iraq War immediately upon taking office, but instead large American forces remained in place for years until heavy pressure from the Iraqi government finally forced their removal; meanwhile, America’s occupation army in Afghanistan actually tripled in size. The government bailout of the hated financial manipulators of Wall Street, begun under Bush, continued apace under Obama, with no serious attempts at either government prosecution or drastic reform. Americans are still mostly suffering through the worst economic downturn since the Great Depression, but Wall Street profits and multimillion-dollar bonuses soon returned to record levels.

In particular, the continuity of top officials has been remarkable. As Bush’s second defense secretary, Robert Gates had been responsible for the ongoing management of America’s foreign wars and military occupations since 2006; Obama kept him on, and he continued to play the same role in the new administration. Similarly, Timothy Geithner had been one of Bush’s most senior financial appointments, playing a crucial role in the widely unpopular financial bailout of Wall Street; Obama promoted him to Treasury secretary and authorized continuation of those same policies. Ben Bernanke had been appointed chairman of the Federal Reserve by Bush and was reappointed by Obama. Bush wars and bailouts became Obama wars and bailouts. The American public voted for an anti-Bush, but got Bush’s third term instead.

During the Cold War, Soviet propagandists routinely characterized our democracy as a sham, with the American public merely selecting which of the two intertwined branches of their single political party should alternate in office, while the actual underlying policies remained essentially unchanged, being decided and implemented by the same corrupt ruling class. This accusation may have been mostly false at the time it was made but seems disturbingly accurate today.

When times are hard and government policies are widely unpopular, but voters are only offered a choice between the rival slick marketing campaigns of Coke and Pepsi, cynicism can reach extreme proportions. Over the last year, surveys have shown that the public non-approval of Congress—representing Washington’s political establishment—has ranged as high as 90–95 percent, which is completely unprecedented.

But if our government policies are so broadly unpopular, why are we unable to change them through the sacred power of the vote? The answer is that America’s system of government has increasingly morphed from being a representative democracy to becoming something closer to a mixture of plutocracy and mediacracy, with elections almost entirely determined by money and media, not necessarily in that order. Political leaders are made or broken depending on whether they receive the cash and visibility needed to win office.

National campaigns increasingly seem sordid reality shows for second-rate political celebrities, while our country continues along its path toward multiple looming calamities. Candidates who depart from the script or deviate from the elite D.C. consensus regarding wars or bailouts—notably a principled ideologue such as Ron Paul—are routinely stigmatized in the media as dangerous extremists or even entirely airbrushed out of campaign news coverage, as has been humorously highlighted by comedian Jon Stewart.

We know from the collapsed communist states of Eastern Europe that control over the media may determine public perceptions of reality, but it does not change the underlying reality itself, and reality usually has the last laugh. Economics Nobel Laureate Joseph Stiglitz and his colleagues have conservatively estimated the total long-term cost of our disastrous Iraq War at $3 trillion, representing over one-fifth of our entire accumulated national debt, or almost $30,000 per American household. And even now the direct ongoing costs of our Afghanistan War still run $120 billion per year, many times the size of Afghanistan’s total GDP. Meanwhile, during these same years the international price of oil has risen from $25 to $125 per barrel—partly as a consequence of these past military disruptions and growing fears of future ones—thereby imposing gigantic economic costs upon our society.

And we suffer other costs as well. A recent New York Times story described the morale-building visit of Secretary of Defense Leon Panetta to our forces in Afghanistan and noted that all American troops had been required to surrender their weapons before attending his speech and none were allowed to remain armed in his vicinity. Such a command decision seems almost unprecedented in American history and does not reflect well upon the perceived state of our military morale.

Future historians may eventually regard these two failed wars, fought for entirely irrational reasons, as the proximate cause of America’s financial and political collapse, representing the historical bookend to our World War II victory, which originally established American global dominance.

Our Extractive Elites

When parasitic elites govern a society along “extractive” lines, a central feature is the massive upward flow of extracted wealth, regardless of any contrary laws or regulations. Certainly America has experienced an enormous growth of officially tolerated corruption as our political system has increasingly consolidated into a one-party state controlled by a unified media-plutocracy.

Consider the late 2011 collapse of MF Global, a midsize but highly reputable brokerage firm. Although this debacle was far smaller than the Lehman bankruptcy or the Enron fraud, it effectively illustrates the incestuous activities of America’s overlapping elites. Just a year earlier, Jon Corzine had been installed as CEO, following his terms as Democratic governor and U.S. senator from New Jersey and his previous career as CEO of Goldman Sachs. Perhaps no other American had such a combination of stellar political and financial credentials on his resume. Soon after taking the reins, Corzine decided to boost his company’s profits by betting its entire capital and more against the possibility that any European countries might default on their national debts. When he lost that bet, his multi-billion-dollar firm tumbled into bankruptcy.

At this point, the story moves from a commonplace tale of Wall Street arrogance and greed into something out of the Twilight Zone, or perhaps Monty Python. The major newspapers began reporting that customer funds, eventually said to total $1.6 billion, had mysteriously disappeared during the collapse, and no one could determine what had become of them, a very strange claim in our age of massively computerized financial records. Weeks and eventually months passed, tens of millions of dollars were spent on armies of investigators and forensic accountants, but all those customer funds stayed “missing,” while the elite media covered this bizarre situation in the most gingerly possible fashion. As an example, a front page Wall Street Journal story on February 23, 2012 suggested that after so many months, there seemed little likelihood that the disappeared customer funds might ever reappear, but also emphasized that absolutely no one was being accused of any wrongdoing. Presumably the journalists were suggesting that the $1.6 billion dollars of customer money had simply walked out the door on its own two feet.

Stories like this give the lie to the endless boasts of our politicians and business pundits that America’s financial system is the most transparent and least corrupt in today’s world. Certainly America is not unique in the existence of long-term corporate fraud, as was recently shown in the fall of Japan’s Olympus Corporation following the discovery of more than a billion dollars in long-hidden investment losses. But when we consider the largest corporate collapses of the last decade that were substantially due to fraud, nearly all the names are American: WorldCom, Enron, Tyco, Global Crossing, and Adelphia. And this list leaves out all the American financial institutions destroyed by the financial meltdown—such as Lehman, Bear Stearns, Merrill Lynch, Washington Mutual, and Wachovia—and the many trillions of dollars in American homeowner equity and top-rated MBS securities which evaporated during that process. Meanwhile, the largest and longest Ponzi Scheme in world history, that of Bernie Madoff, had survived for decades under the very nose of the SEC, despite a long series of detailed warnings and complaints. The second largest such fraud, that of Allen R. Stanford, also bears the label “Made in the USA.”

Some of the sources of Chinese success and American decay are not entirely mysterious. As it happens, the typical professional background of a member of China’s political elite is engineering; they were taught to build things. Meanwhile, a remarkable fraction of America’s political leadership class attended law school, where they were trained to argue effectively and to manipulate. Thus, we should not be greatly surprised that while China’s leaders tend to build, America’s leaders seem to prefer endless manipulation, whether of words, money, or people.

How corrupt is the American society fashioned by our current ruling elites? That question is perhaps more ambiguous than it might seem. According to the standard world rankings produced by Transparency International, the United States is a reasonably clean country, with corruption being considerably higher than in the nations of Northern Europe or elsewhere in the Anglosphere, but much lower than in most of the rest of the world, including China.

But I suspect that this one-dimensional metric fails to capture some of the central anomalies of America’s current social dilemma. Unlike the situation in many Third World countries, American teachers and tax inspectors very rarely solicit bribes, and there is little overlap in personnel between our local police and the criminals whom they pursue. Most ordinary Americans are generally honest. So by these basic measures of day-to-day corruption, America is quite clean, not too different from Germany or Japan.

By contrast, local village authorities in China have a notorious tendency to seize public land and sell it to real estate developers for huge personal profits. This sort of daily misbehavior has produced an annual Chinese total of up to 90,000 so-called “mass incidents”—public strikes, protests, or riots—usually directed against corrupt local officials or businessmen.

However, although American micro-corruption is rare, we seem to suffer from appalling levels of macro-corruption, situations in which our various ruling elites squander or misappropriate tens or even hundreds of billions of dollars of our national wealth, sometimes doing so just barely on one side of technical legality and sometimes on the other.

Sweden is among the cleanest societies in Europe, while Sicily is perhaps the most corrupt. But suppose a large clan of ruthless Sicilian Mafiosi moved to Sweden and somehow managed to gain control of its government. On a day-to-day basis, little would change, with Swedish traffic policemen and building inspectors performing their duties with the same sort of incorruptible efficiency as before, and I suspect that Sweden’s Transparency International rankings would scarcely decline. But meanwhile, a large fraction of Sweden’s accumulated national wealth might gradually be stolen and transferred to secret Cayman Islands bank accounts, or invested in Latin American drug cartels, and eventually the entire plundered economy would collapse.

Ordinary Americans who work hard and seek to earn an honest living for themselves and their families appear to be suffering the ill effects of exactly this same sort of elite-driven economic pillage. The roots of our national decline will be found at the very top of our society, among the One Percent, or more likely the 0.1 percent.

Thus, the ideas presented in Why Nations Fail seem both true and false. The claim that harmful political institutions and corrupt elites can inflict huge economic damage upon a society seems absolutely correct. But while the authors turn a harsh eye toward elite misbehavior across time and space—from ancient Rome to Czarist Russia to rising China—their vision seems to turn rosy-tinted when they consider present-day America, the society in which they themselves live and whose ruling elites lavishly fund the academic institutions with which they are affiliated. Given the American realities of the last dozen years, it is quite remarkable that the scholars who wrote a book entitled Why Nations Fail never glanced outside their own office windows.

A similar dangerous reticence may afflict most of our media, which appears much more eager to focus on self-inflicted disasters in foreign countries than on those here at home. Presented below is a companion case-study, “Chinese Melamine and American Vioxx: A Comparison,” in which I point out that while the American media a few years ago joined its Chinese counterparts in devoting enormous coverage to the deaths of a few Chinese children from tainted infant formula, it paid relatively little attention to a somewhat similar domestic public-health disaster that killed many tens or even hundreds of thousands of Americans.

A society’s media and academic organs constitute the sensory apparatus and central nervous system of its body politic, and if the information these provide is seriously misleading, looming dangers may fester and grow. A media and academy that are highly corrupt or dishonest constitute a deadly national peril. And although the political leadership of undemocratic China might dearly wish to hide all its major mistakes, its crude propaganda machinery often fails at this self-destructive task. But America’s own societal information system is vastly more skilled and experienced in shaping reality to meet the needs of business and government leaders, and this very success does tremendous damage to our country.

Perhaps Americans really do prefer that their broadcasters provide Happy News and that their political campaigns constitute amusing reality shows. Certainly the cheering coliseum crowds of the Roman Empire favored their bread and circuses over the difficult and dangerous tasks that their ancestors had undertaken during Rome’s rise to world greatness. And so long as we can continue to trade bits of printed paper carrying presidential portraits for flat-screen TVs from Chinese factories, perhaps all is well and no one need be too concerned about the apparent course of our national trajectory, least of all our political leadership class.

But if so, then we must admit that Richard Lynn, a prominent British scholar, has been correct in predicting for a decade or longer that the global dominance of the European-derived peoples is rapidly drawing to its end and within the foreseeable future the torch of human progress and world leadership will inevitably pass into Chinese hands.

Ron Unz is publisher of The American Conservative and founder of Unz.org.

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98 Responses to China’s Rise, America’s Fall

@Zhu Bajie
“He’s mistaken about the Euro peninsula. It should be Indian peninsula and Middle East, including Greece. Europe offered nothing special before 1500 or so.”
—
How IGNORANT to say that! Greece is in EUROPE!
And “Mediterranean world and its adjoining European peninsula” indikates on Romans and Greeks!

Hopefully China will continue to improve and the people there get more freedom. However, the Tienanmen Square incident is not a small thing. I suspect the elites in China have no more respect for their people than ours do. Infanticide, forced abortion and summary execution are not policies to emulate. What the west has, the importance of the individual, the idea that the State is supposed to be subservient to a higher law are not ideas to trade away for a mess of pottage.

I do agree, however with earlier commentators about American lack of discipline. Years ago, cutting through the Engineering School at Rutgers, I was struck that the vast majority of students were foreigners, mostly Asian. Americans at that time just went to school to party.

I find it amazing what is not mentioned here: that the dynamic of extractive elites being described started its rapid upward trajectory at exactly the time that Reagan “conservative” policies came to dominate public policy discourse.

The author has forgotten to mention race and diversity as a factor that ensures America will not rise again. China is an homogeneous country with no need of a parasitic diversity industry hovering overhead trying to enforce its ideas of what any given activity should ‘look like’. Chinese have an average intelligence above that of whites and are not saddled with untold millions of low IQ third world people hanging like a millstone round their necks. An entirely white America might have had half a chance of keeping pace with Chinese growth, but today’s America has no chance at all.

“For most of the last 3,000 years, China together with the Mediterranean world and its adjoining European peninsula have constituted the two greatest world centers of technological and economic progress.”

SHAME ON YOU!

You are rewriting history in most shameful way. Civilisation started 7,000 years ago in modern day Iraq by people who spoke a language that the Rev. A.H. Sayce described as recognisable in modern Baghdad and Cairo. I leave the identity of these people to the smart reader to figure out.

Civilisation would develop for thousands of years before slowly spreading out; as to the European Peninsula it didn’t have any civilisation worth speaking of until 2,500 years ago and even then it was right at the edge (nearer to Baghdad than Paris).

When Rome fell after a 1,000 years civilisation had yet to cross the Rhine-Danube boundary. Places like Denmark was in the dark until about only a 1,000 years ago. At the same time the Islamic-Arabic world was richer, more advanced, more civilised than anything in Europe.

As to China its civilisation started about 2,000 years ago with the Qin empire (pronounced ‘chin’ it gives the country its name) and followed by the Han empire (ethnic Chinese are called Han Chinese).

Thanks – this piece is right on target, and revealed to me a good deal of economic chicanery of which I had previously been unaware.

I would like to add to Unz’s list of things that distort democracy in America the most blatant and the least covered in the media: computerized election theft. Historically, election theft has been done one-vote-at-a-time, stuffing ballot boxes. But since 2002, computerized vote theft has gradually become institutionalized. There is a 5-10% shift – always toward the Republicans – in Federal elections across the nation. You can read more about how we can know this is true at http://blackboxvoting.org and http://electiondefensealliance.org .

Calgacus, you’re right on the money with that comment of yours! A lot of wealthy Americans now live in Costa Rica, HK, Thailand and Malaysia and AUS/NZ. Donald Trump has been investing in Costa Rica very heavily…..and there are probably thousands of other billionaires doing the same.

In case people here haven’t noticed, a lot of our super elites have been leaving the U.S. in droves, due to the disproportionally high taxes levied on them now. They are doing this because they are smarter than the rest of us. This started 5 years ago just before the housing crash. Probably has accelerated since 2010 where this article is from.

Even if China’s economy outgrows ours, it would have to be 4x as large as the US economy to match it’s per capita income. The Chinese know that they are running against the clock to modernize it’s economy. They’re nowhere near as energy efficient in their manufacturing processes and they are burning through their profits to build a big enough energy infrastructure to meet the economic growth needs. SinoPec is already partnered with ArAmCo and Exxon to build refineries in China which means those Western Companies are already raiding the Chinese treasure chest. GM and Walmart aren’t selling their products for free, either. In other words, China has been caught in the global economic web and they’re going to get played just like everybody else.

JonF – you might consider the logic of natural selection applied to a population where single men greatly outnumbered single women. If we assume today, and probably in hunter-gatherer societies, that women do/did a lot of choosing of the men who would father their children (not forgetting the theory that African women’s supposed promiscuity was good for countering the parasitic burden of life in Africa by thoroughly mixing the genes) then the quality of the population so far as determined by their genetic inheritance ought to increase. Women will choose the best potential providers for their family or simply choose those who appear to be smartest and strongest and most determined and, in any case, the result will be choosing, on average, fathers who will have smarter more productive progeny than those of the average male.

Does the US not suffer a serioius political Catch 22? You could clean up much of the excessive influence of money for campaigning and the targeting of self-interest simply to get people to bother to vote by adopting the compulsory voting which means that, in Australia, about 90 per cent of those eligible do vote. But what would it do to actual policy when you have such a high proportion of poorly educated and ethnically disaffected poor people with existing entitlements which cause resentment amongst what was once middle America?

And here is an issue for serious empirical study. Why should a great concentration of wealth in the hands of the 1 per cent, or 5 per cent, or 0.1 per cent matter? It is perfectly clear that the very very rich don’t consume significantly more of anything scarce or particularly valuable unless one counts the economically painless transfer or Titians and Tintorettos from one billionaired to another before ending up in a public gallery. It is obviously not impossible for a large super-rich class to so indulge themselves in competitive display by building palatial residences, private airstrips and golf courses and so on, that their country’s economy is starved of attention and capital. But any suggestion that such a situation is to be found in the US needs to be demonstrated. It seems more likely that high taxes and regulatory burdens are adding so much to the cost of doing business in the US and even driving entrepreneurs to set up elsewhere, so that the owners of capital are not deploying it to the greatest advantage of US citizens. Yet that hypothesis doesn’t stand well with the number of Australian software entrepreneurs who leave a country where it is very easy and quick to start a business doesn’t have too punitive a tax regime to start or restart in California where public finances are such a threatening mess.

If the US then is still a good place to deploy one’s capital in order to make a lot of money (and not do it entirely by Wall Street fiddles) and there are large concentrations of wealth which means large concentrations of investable capital what is the problem? Clearly it is what is being done to the average American of no special talent, intelligence, education or skill whose income is no longer supported by the advantages America had for many years after WW2 and is being suppressed by high immigration. To an outsider it is slightly less clear that the situation is made almost intolerable for the squeezed middle classes by tax burdens which are not fairly born by the very rich. It is perhaps a little more certain that the cost of living of the squeezed middle, including the absurdly high costs of health care, are inflated damagingly by the transfer payments to the under classes and elderly poor which don’t give much benefit to the working poor unless one puts a high value on the contribution of their state sales taxes to the keeping of aggressive or hopeless young males in prison…..

China is not to blame for America’s decline, America has to face its own ghosts; the 15 trillion dollars debt, the unemployment,inequality,huge military spending,endless wars… that is what you have to confront.

Blaming others for Americas decline is not the solution. Be A man america and pick yourself,learn from your mistakes and move on

Another blogger jumping on the bandwagon. So easy to say using numbers without any understanding that numbers don’t rule the world – to the dismay of mathematicians everywhere.

None of this takes into account that most of China’s population lives in poverty. And if our own “War on Poverty” taught us anything is that their poor will remain poor for a very long time. There’s also no consideration that China is [still] a Communist country. This experiment simply gained them a bypass in the militarization highway. They needed to up their might quicker. It doesn’t take into consideration that their 5,000yo culture doesn’t celebrate individuality -never has- and this means the creativity needed to push forth on the leaderboard is nonexistent. In fact, the most creative Chinese are those that come to the USA. You can’t lead by proxy.

I am not amazed that the China-uber-allez belief is a conservative thing. Just by definition they cannot forecast the future. The future is full of X factors. X is at the core of America. Your insular perspective of what this nation is all about and what makes it tick make you the LAST ones who will decide where this country goes. I know you’re just dying to sell it to someone else before the price goes down. But you, and some of your commentors, have no idea the self-contained power America holds.

PS: having lived in third world countries I can give you a warning if you’re thinking of moving to Costa Rica or similar places. The people there don’t like loaded-freeloaders. Most of your retirement will be spent on security. And just wait ’til you get your first emergency. Seriously, you’re going to be waiting a good while. America still has the best GOVERNMENTAL services in the WORLD. Ouch I said the “G” word. Little known secret: Libertarians don’t turn down fast rides to the hospital.

Never was a piece written so needed to be read. We are a one party country. We are totally failed by our media for the “most” part. God how is Corzine walking around . Why did no one on MSNBC challenge Obama on pulling out of Iraq. The Democratic Party promised in 96 if they got control of both Houses of Congress they would end Iraq. Where are you MSNBC, Ed, Rachel, “Mathews forget Mathews he’s been in ther tank for either Party in the White House for years” and the loser on at 10 I can’t even remember his name.
Then the Attorney General has he arrested anybody? His only claim to work is the ridiculous suit again Sheriff Arpaio. Holder is beyond doubt the worst AG in decades. Also finally again someone stated the wealth of the upper 1% compared to the bottom 95% . It is time to throw the bums out in both parties.Obama has got to go we need change even if it fails like him. We are in sad shape how many know friends working endless hours of over time not to be payed for it or hanging on not sure if their job will be there next Monday. It’s sad how did they ruined our Country. Buchanan is canned for his book, because it’s racist give me a break. Pathetic!!!

Re: Civilisation started 7,000 years ago in modern day Iraq by people who spoke a language that the Rev. A.H. Sayce described as recognisable in modern Baghdad and Cairo.

Quibbles:
Ancient Sumerian, which was totally unrelated to any modern language (except maybe at prehistoric remove), would not be recognized by anyone in Baghdad today. Ancient Egyptian might be recognized as something vaguely familiar by a modern Copt since the Coptic liturgy still uses a language descended from it.
And if civilization means written language, organized govermment, organized religion, metallurgy, civic works etc. then it started a little over 5000 years ago (c. 3200BC) not 7000.

James Guest,
I have a certain healthy skepticism about genetic determinism in any guise, especvialkly since women are not always known for the sagacity of their choices in mates in our own era. And again, given that men and women are born in approximately equal numbers and that neither sex is more vulnerable to childhood illnesses than the other, the only mechanisms I can conceive of to produce a huge male-heavy gender imablance in a low-tech society would be if the society was subject to routine woman-stealing by outsiders. That’s possible, but I’m not sure you can find very good evidence for it.
By the way, modern hunter-gatherer societies are suspect as stand-ins for the prehistoric sort. For one thing they are all subject to the influence of modern high-tech cultures around them, and the few that remain are under enormous deforming stress from the outside world.

JonF – you seem to have forgotten that you posited that China would have and probably suffer from an imbalance in the sex ratio whereby there would be a lot of unmarried males because of the shortage of marriageable females so I am surprised at your now struggling to see how there could be a “gender imbalance in a low-tech society”. Even the lowest tech societies can manage infanticide when they don’t have access to X-rays and many did. But, anyway, the point was about China which we know has a great excess of males, partly exacerbated probably by the one child policy although also the product of a traditional preference for male children.

My point about the possible improvement of the population by natural (or, if you think it more accurate, sexual) selection under such circumstances is hardly “genetic determinism”, that is unless you don’t think genetic inheritance has anything much to do with an individual’s intelligence, energy level or character and are therefore repudiating the idea that, for example, clever parents tend to have clever children. Even if, contrary to all human experience, you deny that females in conditions where they are not indulged as little princesses are going to attempt to mate with males who can provide well for her and her children, as well as defend them, and that it isn’t difficult in most societies to detect the most reliable indicia of such qualities, you might concede that the male who is cleverer and more energetic and determined than average is likely to be more successful in finding a woman to marry him than those who are below average. The result is the same. Logic suggests that an imbalance in the sexes should be conducive to the improvement of useful cognitive abilities and other qualities in the population. Can you cite facts which would trump that logic with evidence?

“I have a certain healthy skepticism about genetic determinism in any guise, especially since women are not always known for the sagacity of their choices in mates in our own era.”

Is this some sort of joke? What does this mean?

Angel:

“There’s also no consideration that China is [still] a Communist country.”

No, it’s not, and it hasn’t been since the era of Deng Xiaoping in the 1980’s. The Chinese state spends a smaller percentage of GDP than almost any Western nation, 22% versus an average of ~40% in EU/US: some “communism.”

“And if our own “War on Poverty” taught us anything is that their poor will remain poor for a very long time. ”

These are two totally separate issues with two totally separate etiologies that really can’t be conflated with one another at all. American inner city poverty is the result of educational underachievement relative to the majority population whereas Chinese poverty is a simple lack of physical infrastructure: factories, mines, railroads, etc. The other East Asian states on China’s Pacific littoral such as Japan, South Korea, Taiwan, Hong Kong, Macao, Singapore, et alia all managed to overcome that infrastructural shortfall in a few decades and I don’t see why China will be any exception. The last three decades of absolutely incredible Chinese growth don’t give any indication at all that China is an exception to the general East Asian trend.

“I am not amazed that the China-uber-allez belief is a conservative thing. Just by definition they cannot forecast the future. The future is full of X factors. X is at the core of America.”

I suppose I ought explain myself a bit more fully.
First off, I do not believe in genetic determinism, at least not beyond the level of blue eyes, hemophilia and the like. We are not preprogrammed robots.

By low-tech society I do not mean modern China. I don’t even mean ancient China, or Bronze Age Sumeria. I am speaking of hunter-gathrers or very simple agriculturalists. You say such people *might* pracrtice female infanrticide, but is there any evidence they did so, and secondly, why would they do so? Infanticide of infants born sickly or deformed– yes, I don’t doubt they would do that. But in primitive societies a healthy child, male or female, was a valuable resource for the family or band– just about the only resource in fact since, other than maybe dogs, they had no source of labor except human labor– and daughters could work just as hard as sons, if not at all the same tasks, but still at tasks crucial for survival. You really do not find women being devalued until you start seeing a economic surplus develop in societies and daughters become less useful for labor– and even for childbearing, as a population surplus develops as a result of agriculture. In very primitive groups however childbearing is a of numinous value (it’s debated when and how humans even learned how conception comes about) and women are to be valued for that reason above all else.
So no, I do not see primitive societies developing a surplus of males, but to the contrary a (slight) surplus of females as the men were liable to killed in hunting mishaps or in some cases in violent confrontations with other peoples.
Also, do not read back modern American mating customs on the distant past (or even the recent past). Young people, and especially young women, are not known for making wise choices about such things, and for much of history families did everything they could to steer their children toward more suitable matches than the emotional follies of youth might lead them to. So it would not have have been *women* making those choices, but families, perhaps the community as a whole. And yes, this may have produced good pairings, but again, beware genetic determinism. Surely a short history of any noble or royal family in historical times is proof against the notion that “great” men and women always produce “great” offspring. Regression to the mean (and sometimes to less than it) would seem to be the rule instead.

Interesting comments from folks. As one who left the U.S. in dismay and disgust at the depths to which the George W. Bush administration dragged the U.S. and at his election (not re-election since he was not elected in 2000 but appointed by the Supreme Court) in 2004 and one who returned a year ago mostly due to the hope engendered by Obama’s election, I tend to be more optimistic about the U.S. but only if we are able to challenge the dark forces that keep the majority of U.S. voters in a state of ignorance and anxiety. The main challenge right now, as I see it, is to get a constitutional amendment passed that overturns the “Corporations are people, money is free speech” absurd court rulings as, if these are left to stand, will destroy the U.S. faster than a thermonuclear attack. The U.S. has overcome adversity before. We tend to solve problems pretty well when we know what they are and when we’re agreed upon what they are. Right now, folks are puzzled and confused about the way forward. And the small size of Obama’s successes are a testament not to failings on his part but to the appalling state of the system in which he’s forced to operate and the enormous power of forces much bigger than he is. We are ruled by unelected corporations whose Boards pre-select candidates from whom we elect ‘freely’. We are all responsbible for allowing the system to deteriorate this far and for allowing its continuation. But America has come through before … why all the doom and gloom now? As an aside, I agree with those who see our continuing and increasing diversity and large-scale immigration as our greatest strengths and these should be nurtured and treasured, not feared. Nobody ever moved forward from a position of fear. Fear can only lead us backward.

Funnily enough, Japan, Korea, Taiwan and and a score of European nations managed to build First World economies with negligible diversity. It’s also rather peculiar that the much less diverse “America” of decades past had a much stronger economy than does modern day America, or that non-diverse China is progressing economically much, much faster than insanely diverse India.

It’s almost as if diversity is utterly and completely worthless. I wonder why that is…

This is one of the best all encompassing essays/ articles I’ve ever read. What I think we all need to see is that America is in super big trouble. No industry, no jobs, poor healthcare system made worse by Barrys super health plan which he has shoved down our throats. Our government is corrupt, heartless and self serving. They don’t care about the people they represent at all. And they’re completely, absolutely out of touch with American citizens. And guess what–we now face 6 months of obnoxious tv ads with barry and milt slamming each other instead of focusing on the issues. Worse, taxpayer money subsidizes some of their ads. And the corrupt senile Supreme court paved the way for unlimited spending and now these fossils are deciding the fate of the healthcare bill which doesn’t affect them at all, btw.

Yes, America IS bankrupt. Ben keeps printing money. China holds the markers and loans us our own money to prop up our phony standard of living.

We have ourselves to blame–Americans distract themselves with the most nonsensical, meaningless crap–celebrities, dwts, idol, biggest loser, pro sports, tabloid trash, stupid sitcoms. Oh yes, now the NFL draft—so important when many Americans are struggling to keep a roof over their heads. We have no attention span, nobody cares and we are totally asleep at the switch. Or heads buried in our iphones. All this time China has focused with laser like precision on becoming the worlds economic superpower and they have succeeded Other countries must laugh at us. We just don’t seem to want to save ourselves. Nobody cares.

Okay a bit negative, and some of you may criticize me for it as is your right. But check this out…I am doing my part to help this country in a huge way having opened the only “Made IN USA” product store in Colorado and the Rocky Mountains. Business is slow still but we are hopeful that Americans will wake up and learn that buying American stuff will create many many jobs, etc. http://www.strictlyusa.com.
Essentially I’m not getting rich—I am doing it for all of you. Really.

I am confident with hard work and FOCUS on the job ahead, we can regain our country.

China is not a homogenous country; it too has diversity, albeit mainly from peoples it has conquered over the centuries rather than through immigration.
And when was the USA not diverse? Jim Crow did not mean black people did not exist, and in times past Italians, Irish, Slavs, etc. played the “foreigner” role that Hispanics are assigned today.

I liked the side-bar on Vioxx (a drug I took [6/99 to 12/00] because my PCP recommended it; probably because the pharma rep “sold” it to her). I had TIAs, migraines (cradle cap and visual), and a few mini-strokes until 4/2005. I have to take aggrenox, clonazpam, and protonix (Merck) to prevent any left-over “issues” that Vioxx did to my CV system.
I quickly read most of Mr. Unz’s main article. My takes from his article are: the oft-quoted “the enemy is us [sic], and we have met them.” and many scenes from Peter Seller’s last movie (Being There). IMHO, it was a brilliantly and painfully funny movie about just how “mad” this world is. I think two scenes early in the film mirror what Mr. Unz may be saying: 1) when Sellers leaves the old bow-front house and enters a street scene full of blacks, and 2) when he stops in front of a TV showroom at night (before the car backs into him). The in-store video-cam focuses on him; however, he cannot understand how he appears on all the TV sets. My take: we take no interest in others around us (even though it would be good for all of us in the long-run) and we ignore our own means to see through the lies, deceits, and hypocrisies.

@libertarianjerry, “Over half of the American voting population are net tax consumers. Yet,if one becomes an entrepreneur,creates jobs,pays taxes and is successful then that person is vilified and condemned as an exploiter. The Cultural Marxists have done a good job of creating a climate of class warfare. ”

you seem to have entirely missed the point of the article. Mr. Unz quite correctly points out the source of our economic and political difficulties is rent extraction by our elites:

“The roots of our national decline will be found at the very top of our society, among the One Percent, or more likely the 0.1 percent.”

Yet somehow you turn this into a condemnation of millions of working people who are merely trying to survive in the corrupt system created by the .01%.

We should learn from china’s achievement and try to compete with it. instead of try to contain it.
We are more advance in technologies and innovations.
We will achieve if our Gov. really want to do it.

In what way will China become the #1 nation? By outgrowing the U.S. and Jpaan? Or by the economies of the U.S. and Japan tanking? Last time I looked the Chinese government is quick to pick winners in their economy, divert fund to exploring “Green” alternative technologies and, ultimately, suppressing criticism. In other words, China has moved from a Third-World nation to a Second-World. While the U.S. has moved from a First-World nation to a Second-Word. In other words, China’s economy is growing as the U.S. economy has fallen but whether China is becoming a First World nation is doubtful as the Chinese Government aren’t going to step aside and let the private sector do as they see fit. Hence China and the U.S. both intend to become Second-World: a nation of Fascists and Crony Capitalists. It’s not bad as being an outright Third World nation of famine and despotism but it sure as Hell ain’t free either.

“competent leaders with access to growing national wealth can effectively solve these sorts of major social problems.”

Mr. Utz, are you suggesting that collectivist, top down solutions to problems caused by collectivist, top down policies are desirable? China’s economic growth is taking place despite the collectivist nature of the national government, not because of it.

Maybe I’m misreading your article, but it seems you’re recommending some large tweaks to our current command economy rather than any turn away from government control.

In my view, the very idea of “competent leaders” in a political system is absurd. Politics creates problems, not solutions. Allowing these “competent leaders” access to “national wealth” is a prescription for disaster, because wealth isn’t national, it’s personal, unless property rights do not exist, with all wealth being collective, under the control of a central government.

Absolutely brilliant essay, Mr. Unz. I write a column for our weekly alternative newspaper, and will be citing this frequently in coming weeks, in opposition to our local Americans For Prosperity (of the 1%) mouthpiece.

It’s obvious both our and China’s government is subverted by a foreign entity. The whole “they don’t care for their own” meme relies on people not actually searching the names of the driving force behind these civil disasters and doing some research to find a common theme with them all.

Meanwhile, the largest and longest Ponzi Scheme in world history, that of Bernie Madoff, had survived for decades under the very nose of the SEC, despite a long series of detailed warnings and complaints. The second largest such fraud, that of Allen R. Stanford, also bears the label “Made in the USA.”

That is incorrect. The fraud at the Grays Building Society in England lasted even longer, being handed down over generations of perpetrators.

So it seems to me that the USA is only slightly more “diverse” than China in percentage terms when you spell things out in terms of Black and White. However, looking at the cultural variations and especially language, it becomes quite clear that the designation of “Han Chinese” is as meaningful or meaningless as the designation “White American.”

I agree however that a nation unable to cope with its own diversity and the challenges it presents by discarding bigotry is doomed to failure.

Let’s See: There is democratic capitalism, socialist capitalism, communist capitalism. Is capitalism economics or politics? Does it matter in a global economy? The real forces in a globnal economy are plutocratic and autocratic, whether state or corporation. The real marketplace does not tolerate the slow moving politics of democracies or republics. Meet me in the CEO’s office and the Boardroom.

One commenter wrote: “Hopefully China will continue to improve and the people there get more freedom. However, the Tienanmen Square incident is not a small thing.”

The Tiananmen Square conflict has been widely distorted in the West. It should be noted that China’s prime minister Deng Xiaoping was forced to resign, and apparently was willing to do so, after having ordered the soldiers to clear the square from illegal occupation, leading to a death toll he had not intended.

It should also be noted that some of the demonstration leaders did everything they could to provoke the army into attacking, so they could have a martyr cause to rally around. Initially the military had been highly positive toward the demonstrators, there are many pictures of videos of soldiers singing together with the demonstrators (not on the square itself, but those around the square, who tried to block the roads so the military couldn’t get through to the square), who were the same age as them. This was not discouraged by the officers, and so it went on for days. Until the demonstrators turned hostile.

Before that, Deng Xiaoping had invited the leaders of the demonstrators to talk with him directly, which they did on national television. Imagine a U.S. president inviting “Occupy” protesters to sit down with him on television. Or Ron Paul-inspired demonstrators – it would never happen.

Deng Xiaoping was the man who ended communist control of China. He had been forced into exile to the western outback, but returned after Mao’s death. He filled the Chinese government with other men who had been imprisoned or exiled by Mao. He changed the economy and saved the country from economic collapse, thus being responsible for saving hundreds of millions of people from poverty. And yet he resigned after Tiananmen Square.

Note also how the demonstrations started. We only hear that the involved called for “democracy”. The truth: they were students who wanted more money and perks, like students always do. They started by attacking dorms with Third World students from Africa and elsewhere, dragging them out and beating them. They cheered Mao and demanded a return to his society, which they imagined was a way to get free money taken from those who did actual work. Typical leftist students.

The distortion of the Tiananmen Square story perfectly illustrates Ron Unz’ point about the leftist media elite controlling the information flow. They loved China when it was communist, and made sure slogans such as “China out of Tibet” never got wide attention, focusing instead on “America out of Vietnam”. Now that China is Nationalist, they hate it for playing its own game, without being controlled by the globalist elite.

You might be interested to mention next time that China has overtaken the United States in patent filings, utility model patents, industrial design patents, trade mark filings, as well as scientific paper publications.

I’ve verified the truthfulness of the article by talking to Beijinger’s who where present at the time. It appears some students were more than happy to play along with the Western narrative because it provided a free “get into the West” passport.